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Articles from 2020 In April


Coronavirus

How is COVID-19 impacting the food supply chain?

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A pair of Purdue professors offer answers and insight on how COVID-19 is impacting the food supply chain and animal welfare.

Q. If there’s a surplus at the farm, why is there a shortage in the grocery store?

Why are farmers dumping milk and plowing under vegetable crops while grocery store shelves are bare? This happens when the processing and distribution sectors that turn raw farm commodities into the food we eat are disrupted. With 54% of food spending occurring in restaurants and cafeterias, and that sector of the economy nearly shut down, there was a dramatic spike in demand for food in grocery stores — a demand the industry was not prepared to meet. Dairies, for example, may package small cartons of milk for schools that are now closed and not have the cash and equipment necessary to package milk in gallon jugs.

Q. Why would farmers throw away food?

Despite the COVID-19 crisis, cows continued producing the same amount of milk. With restaurants and processors unable to take their usual quantities of agricultural products, farmers are left with few options. In some cases, products can be stored in warehouses or grain bins, but those aren’t options for perishable products. Sometimes farmers can donate to food banks. However, food banks don’t have the equipment or volunteers to take bulk quantities of raw milk, for example, and convert it to products we can consume. It’s also costly to harvest and transport food. The unfortunate result is that food is sometimes dumped, discarded or fed to livestock. No farmer takes this decision lightly. The recently passed CARES act includes some provisions for the government to buy excess production, which may provide some relief.

Q. Why are meat packing plants shutting down?

Most of the livestock and poultry slaughter in the United States occurs in a small number of large meat packing plants, and then products are distributed to tens of thousands of grocery stores and restaurants around the country. For example, there are more than 60,000 pork producers in the U.S., but roughly 60% of all hogs are processed in just 15 large pork-packing plants. These packing plants are designed to efficiently and affordably process animals for food consumption, and each one has a large workforce. Several packing plants were temporarily shut down when a number of workers were diagnosed with COVID-19. Employees work in refrigerated buildings in close quarters, where there is a high potential to spread the COVID-19 virus among workers. An important note: There is no evidence that COVID-19 is spread through food.

Q. What are the impacts of packing plant shutdowns for farmers and consumers?

U.S. meat processing capacity has been significantly diminished. Due to shutdowns and slowdowns related to COVID-19, packing plants are no longer able to take as many cattle and hogs, the price of livestock has plummeted, and farmers and ranchers are left without a destination for their animals.

While producers are facing lower prices for livestock, consumers are facing higher prices for meat products. With packing plants unable to process as many animals, there is less meat on the market, and competition among groceries to secure supply is pushing up retail prices. Retailers may dip into cold storage inventory if they run out of stock, and the beef, pork and poultry we typically export could be left in the U.S. for domestic consumption. Still, consumers will likely need to remain flexible and adapt to meat product availability and prices.

Q. Are we going to run out of food?

No. Agriculture is a seasonal business. The corn, wheat, soy and rice we are eating today was harvested and stored months ago. Food production is widely distributed across the United States. So, even if one area of the country is hard hit by the coronavirus, production in other parts of the country will offset losses. The peak-demand observed in grocery stores in mid-March has largely subsided. While grocery sales initially increased 100% or more for many items, grocery buying is now only about 20% to 30% higher than this time last year. The challenges observed in the grocery store are not a result of insufficient food, but rather the difficulties in processing and distribution.

Q. How much of our food comes from abroad?

Although the U.S. exports more agricultural products than it imports, there are some food products for which we rely on farmers in other countries. Overall, only 11% of the food we eat in the United States comes from abroad, but this figure varies widely based on the food. Which foods might become scarce if the global flow of food subsides? Virtually all the coffee, cocoa and spices Americans consume come from abroad. Most of the fish and shellfish we consume is imported. And about half of fresh fruits, mainly bananas and grapes, are imported.

Q. Why euthanize the animals instead of just keeping them on farms?

The decision to euthanize large numbers of animals is a devastating last resort for farmers, who typically seek out all feasible alternatives before making such a decision. With processing plants unable to operate at capacity and some already temporarily shut down, farmers will make the difficult decision to euthanize.

Q. How will the animals be euthanized?

Euthanizing animals safely, humanely and in a timely manner is an enormous challenge. Farmers will work with their veterinarians to use American Veterinary Medical Association-approved methods that result in the quickest, most humane method of euthanasia possible for the types and ages of animals on their premises.

Lusk is distinguished professor and head of the Department of Agricultural Economics, Purdue University, and Croney is a professor of animal behavior and well-being and director, Center for Animal Welfare Science, Purdue University.
Source: Purdue University, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset. 

MIDDAY Midwest Digest, April 30, 2020

Mortgage interest rates fell again, to the lowest level on record. 

Drought is almost non-existant across the heartland of America. 

Authorities in Kentucky say four children died and one is missing after an Amish buggy was swept away in a flood current.

Bars may be closed, but beer is still selling; in fact, sales have gotten a boost during the pandemic.

 

Coronavirus

Where are the feeder cattle? Everywhere but feedyards

Nevil Speer May 1 feeder cattle inventory shows large numbers outside feedyards

During the past several weeks, this column has highlighted the dramatic effects COVID-19 has had on beef industry. As part of that series, Industry At A Glance recently featured the sharp slowdown in feeder cattle sales during the past six weeks or so.  

That discussion noted that there will be some long-run ramifications because of the disruption. Most notably, “…those feeder cattle haven’t disappeared, they’re just being held at home. Eventually, that’ll likely be reckoned with a surge in feeder cattle placements in months to come…”

There are fewer cattle going to slaughter, that means reduced orders for feeder cattle placements to take their place. To that end, this week’s graph illustrates the reality of feeder cattle staying at home. The data represent the January 1 feeder cattle inventory outside of feedyards less placements during January through April. The net result being available feeder/stocker supply on May 1.  

The year started with 26.45 million head – right in line with the last four years: the 2016 to 2019 average equals 26.32 million head. However, reduced placements as a result of COVID have dramatically changed the year-over-year comparison. 

That is, the May 1 inventory in 2020 looks very different compared to the previous four years. This year’s total is over 1 million head bigger versus available supply between 2016 and 2019 (18.85 million head). 

Nevil SpeerMay 1 feeder cattle inventory shows large numbers outside feedyards

Once some sense of normalcy returns, it’ll be challenging for the industry to absorb those extra cattle in a seamless fashion. And meanwhile, the spring calf crop will also begin pressuring available supply as we transition to the fall marketing season. 

Bottom line, bigger supply rules the day—there’ll be no shortage of feeder cattle going forward. Clearly, that’ll have a negative influence on price, not to mention the string of heavy losses in the feedlot sector. That said, value-added management and subsequent marketing is more important than ever. 

Nevil Speer is based in Bowling Green, Ky. and serves as director of industry relations for Where Food Comes From (WFCF). The views and opinions expressed herein do not necessarily reflect those of WFCF or its shareholders. He can be reached at nspeer@wherefoodcomesfrom.com. The opinions of the author are not necessarily those of beefmagazine.com or Farm Progress.

The big question: Will there be enough grass for grazing livestock this summer?

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Not only are beef and cattle prices providing a challenge to livestock producers, but the productivity of grassland is also weighing heavily on our minds. Calculating grassland productivity, a key to a successful year, is something that must be done each spring when trying to decide how many cattle to turn out to pasture, how long to graze an area, or where forage might be abundant.

An online tool designed to help make such decisions is again available this spring—with some new upgrades to ensure that it serves a wider audience and provides more helpful and detailed information.

The Grassland Productivity Forecast or "Grass-Cast" was  developed in 2018 by scientists at the USDA Agricultural Research Service (ARS), along with other Federal agencies and several universities. It was originally designed for ranchers and grassland managers in the Northern Plains and was expanded in 2019 to cover the Southern Plains.

Expansion in 2020

Later this spring it will be expanded again to cover much of New Mexico and Arizona. Grass-Cast also will now provide forecasts for individual 6-mile x 6-mile areas, rather than the county-by-county results available in previous years.

"It's increasingly popular with ranchers and other land managers who are hearing about it from our partners with the Natural Resources Conservation Service (NRCS), Forest Service, Farm Service Agency, and University Extension. Still, we are always looking for ways to make it more useful, so we welcome any suggestions," says ARS economist Dannele Peck, who oversees Grass-Cast as director of the USDA Northern Plains Climate Hub.

During the 2019 season, the Grass-Cast website was visited nearly 3,000 times by over 1,800 different users.

Grass-Cast uses over 30 years of historical data about weather and vegetation growth—combined with seasonal precipitation forecasts—to indicate whether grasslands are likely to produce above-normal, near-normal, or below-normal amounts of vegetation. It is the result of a partnership between  ARSNRCSColorado State UniversityUniversity of Arizona, and the National Drought Mitigation Center (NDMC) at the University of Nebraska-Lincoln.

The first Grass-Cast maps for the 2020 season were released in mid-April and will be updated every two weeks until the end of August to incorporate newly observed weather data. Grass-Cast becomes more accurate as the growing season progress so it should be consulted more than once. Land managers typically start paying close attention to the forecasts in May and June, when the risk of drought might prompt them to sell yearlings or older cows, wean calves early, buy feed, or move livestock to areas where grass is more plentiful.

Grass-Cast has some limitations, though. It cannot tell the difference between desirable and undesirable forage species, so land managers need to know what proportion of their pastures are weedy, and how those weeds will respond to rain, or a lack of it. They should also combine the forecasts with their knowledge of local soils, plant communities, topography, management history, and other conditions that affect vulnerability to drought, Peck says.

The Grass-Cast website provides tutorial videos, printable handouts, scientific papers, and other features. It can be accessed here.

Source: USDA, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.

Coronavirus

COVID-19: One size does not fit all in the cattle market

Farm Progress marketing cattle

Cattle producers often feel – rightfully – that others do not understand the cattle business. Producers face many challenges and unique considerations of raising cattle in a vast array of climates and production environments; and they constantly fend off a never-ending set of calls to change how cattle are produced for this or that unrealistic demand or expectation of someone somewhere. 

Then there’s this: The U.S. cattle and beef industry is probably the most complex set of markets on the planet. It is extremely difficult to understand with many levels of productions and an enormously complicated marketing chain. 

COVID-19 has caused unparalleled and catastrophic impacts on cattle and beef markets along with every other part of the economy. Cattle and beef markets are experiencing devastating shocks and challenges resulting in price changes and market behavior that are not only unprecedented, but also difficult to understand and confusing to many. 

The anger and frustration of some cattle producers has turned to accusations and proposals for change that will have long-term implications and unintended consequences for the cattle and beef industry.

Currently some cattle producers are calling for one-size-fits-all restrictions on business practices or changes in industry structure based on a lack of, or an incomplete understanding of, how packing and processing businesses and markets work to process and market thousands of different beef products in a multitude of wholesale and retail beef markets.

Never before has the industry faced so many challenges that threaten the operation of multiple processing facilities simultaneously along with massive disruptions to the food service supply chain severely limiting nearly half of the total beef market. 

The impacts of COVID-19 on beef markets would not be different if the industry consisted of more, smaller, less efficient packing plants that were forced to purchase cattle in immediate cash markets. It might well be worse.

The current structure and business practices of the industry evolved in response to the economic forces that drive the beef industry, like every industry, to be as competitive as possible. The cost efficiencies of large-scale cattle feeding and meatpacking operations is undeniable.

Some current proposals will add cost and risk to the industry and will further increase the differences between cattle and wholesale beef prices. A less efficient, higher cost beef industry will ultimately result in higher beef prices for consumers and make beef a less competitive protein industry. Simultaneously, cattle producers will face lower cattle prices and, as the industry downsizes, more will be forced out of the industry. 

Cattle producers will decide what sort of policy prescriptions they want to pursue that will affect how the beef industry functions. I am not suggesting what policies should or should not be promoted. My job is to make sure that the industry understands the implications and consequences of alternatives that are being considered. 

Some of the proposals being promoted today will have unintended consequences that are negative for the entire industry. This industry consists of many diverse sectors and perspectives but in the end the entire cattle and beef industry will thrive or not as a single industry. 

Be careful what you ask for.

Peel is an Oklahoma State University Extension livestock marketing specialist. The opinions of the author are not necessarily those of beefmagazine.com or Farm Progress.

Coronavirus

COVID-19: Stay in touch with your banker

Burt Rutherford cattle feedlot

Beef producers know all about the best-laid plans. Because it seems if it’s not Mother Nature wreaking havoc, market volatility steps in. This spring, COVID-19 has been the culprit. With uncertainty in the markets, many have elected to delay selling. But what happens if their loan payment is due soon?

Ken Leiber, a Texas and Southwestern Cattle Raisers Association director and president of National Finance Credit Corporation of Texas, said communication is key — and the last thing lenders want is to be surprised.

“You can lay out your plan, but in the cattle business, you still have to react and adjust along the way,” Leiber said. “It’s your business to manage as the producer, but when you change your mind and your plans, it’s time to talk to your lender. Tell him what you’re thinking and why you’re thinking that.”

Plan of action

He said whether a rancher is considering a new marketing plan or has decided to retain ownership at the feedyard, the lender wants to know.

“Let’s say you’ve got cattle on wheat pasture right now and you know it will run out next month and you don’t want those cattle to go backward,” Leiber said. “The clock is ticking so you want to communicate, ‘Here are my options and here’s what I think I’m going to do.’”

Talk to your lender

He also encourages producers to bounce ideas off their lender.

“You might want to approach it like, ‘This is what I'm thinking. Shoot holes in it,’” Leiber said.

Source: TSCRA, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.

Coronavirus

COVID-19: 4 ideas to help weather a tumultuous 2020

Jamie Purfeerst Marketing cattle

When will this all end and what should I do in the meantime?

Those are just two of a myriad of questions that beef producers are asking. The answer to the first one is nobody knows for sure. There will be at least several more months of this economic environment and it could easily stretch into 2021, according to the Livestock Marketing Information Center (LMIC).

And the second one? Prepare for price volatility. As conditions change, be ready to adjust marketing plans. It is especially important to communicate with family, partners, and financial institutions.

Given the unknowns in the COVID-19 environment in cattle country, what can we monitor for insight and planning purposes? LMIC offers four ideas to consider.

First, carefully monitor the operation’s forage situation. Importantly, take that to the next levels—looking at surrounding areas and states, and nationally.

Pasture conditions this year will be critical to regional and national marketing flows of calves and yearlings. USDA’s National Agricultural Statistics Service (NASS) will begin reporting weekly pasture and range condition updates soon (in the Monday Crop Progress report).

Many more animals are headed to spring and summer grazing programs than in recent years because of the drop in the number of animals being placed into feedlots, a trend that may continue for several months. Poor pasture and range conditions could cause bunches of cattle to move into the markets quickly. Further, more winter feed will be required if producers who typically don’t hold-over calves into the new calendar year, did so in 2020.

Second, follow the monthly national feedlot placement statistics by NASS, even if you are not feeding cattle. An eye on those results provides an indirect look at how cattle feeders are positioning (head they are buying and at what weights). It will be a measure of how many more animals are outside of feedlots (still on farms and ranches) than last year.

Third, this year, even solely forage-based operations need to keep an eye on feedstuffs, especially corn. Be aware of trends in soybean meal and in hay prices.

The two major drivers of calf and yearling price are fed animal prices and the cost of gain in a feedlot. Critical will be the number of corn acres planted in the Midwestern states.

Beginning with planting season, the markets will focus on spring and early summer growing conditions. Low feedstuff costs can become a supportive market factor for late summer and early fall yearling and calf prices. Drought will do the opposite.

Fourth, pay attention to the U.S. dairy sector. Is there potential for bursts in cow culling? Dairy producers are facing very challenging financial circumstances. One of their options is to cull cows. Depending on timing, this could cause already low prices to fall off a cliff. Milk prices and details of any Federal programs could be crucial.

Source: LMICwhich is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.

Meat Market Update | COVID pushes cutout to all-time record price

The daily spot Choice box beef cutout ended the week on Friday, April 24 at $293.37, which was $54.38 higher compared to previous Friday, as beef sales prices improved again as plants close because of COVID-19 outbreaks. That is highest number ever recorded. Last year, it was $232.99 on the same Friday, which was almost steady to the week prior. This week all of the major daily primals were $32-98 higher, with the rib and loin gaining the most.  

The daily Choice cutout then continued to climb higher and set a new all-time highest price at $330.82 on Tuesday, April 28.

There were only 4,555 total loads sold for the week, which was 693 loads lower than the previous week, as some plant shut downs and others run at slower production.   

The estimated weekly total FIS cattle harvest for week ending 4/25 was 465,000 head, which compared to 642,000 head the same week last year. We've now seen three weeks of well over 100,000 head lower than last year due to plant closures and slowdowns.

 

MORNING Midwest Digest, April 30, 2020

How many of you need a haircut? As states relax restrictions, salons will be busy. But bars will continue to stay closed.

The IRS isn't handling paper tax returns right now.

The meat packing plant in Worthington, Minn., opened yesterday, but with a minimial amount of employees, and only for euthanization.

Folks are finding new ways to worship; one church held a drive-in-service this week.

Chalk artwork in Kansas City, Mo., is on display, drawn by Hallmark artists.

Namibian beef imports now in the US

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Namibian exports of grass-finished beef came into the US just as the COVID-19 crisis seems to be causing slaughter-plant closings and some reports of high product demand.

The Meat Import Council of America announced a few days ago that the first shipment of 25 tons of boneless beef from Namibia, Africa, arrived in the United States.

Namibia is in southern Africa, on the west coast, and has a large portion that is free of foot-and-mouth  disease without vaccination, and a smaller portion that is not free of FMD. This map shows those divisions and location.

MICA is an organization that seeks open trade. It was originally made up of what appear to be processors of meat and other foods, although the membership construct today is not readily available. The group states, “It is MICA’s belief that imported frozen boneless meat forms an essential part of the historic total U.S. supply of meat. MICA continues to seek the end of all restrictions in order to benefit U.S. consumers, the economy and, of course, its friends and members.”

The Namibian imports have been noticed and called out by beef producers upset with the current state of slaughter plant closings and live-cattle to retail price spreads in the United States.

The article on MICA’s website said it was from The Namibian and it said the 25 tons of beef is Meatco’s first full container exported to the US.

The beef exports come after 18 years of negotiations between the two countries, the article said. In 2002 and 2005, Namibia initiated negotiations on the export of meat products to the US with the intention of exporting boneless raw beef products such as prime cuts, chuck, blade and beef trimming.

The article also said Meatco is the first company from Africa eligible to export meat to the US. The product is grass-fed with no added hormones or antibiotics.

The source said Verde Farms is the importer and it produces grass-fed products. It also said Agro Merchants, the Mullica Hill team operating the largest import establishment in the country, inspected the beef consignment to see whether it met the United States Department of Agriculture (USDA) standards.

Meatco is a Namibian beef processor which has been audited by USDA and recognised as “equivalent to US establishments.” The Food Safety and Inspection Service (FSIS) in the US reinspects consignments.

The article further said Namibia underwent several audits in September 2019, including a public health and assurance audit by the US via Food Safety and Inspection Services (FSIS).

On an annual basis, DVS submits an online self-audit, which FSIS verifies with an on-site audit every two years.

The audit ensures that Namibia complies with all the import requirements of the US beef market and, based on the final audit report, Namibia was granted access to continue exports to the US.

Meatco will be exporting boneless raw beef products and may also export both chilled and frozen boneless meat to the US.